17 January 2019

Gilts and Bullion

A letter to the Editors

Dear Sir

As most bullion depositories offer the facility of lending out existing holdings to speculators in return for a fixed/interest charge payable to the bullion owner, Gold need no longer be a non yielding asset class.

Frank’s observation about the relative good value of TBills vs Gilts may be a reflection of the distortion in the FX Cable rate, which heavily influenced by the Brexit uncertainty, has hovered around the $1.2 -$1.3 range for so long that it can easily appear to be the norm.  At the $1.50 -$1.70 range (which most would argue is its more traditional bailiwick) the 20 year currency risk would be acceptable, but then the economics would not work.

Regards

Anthony Silver

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